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substantially similar to Article VII, paragraphs (1) and (2) of
the Canadian Convention. While the Model Treaty itself provides
no more explanation than the Canadian Convention on how to
determine the profits attributable to a permanent establishment,
the Model is explained in part by the Model Commentaries.
Petitioner relies upon paragraphs 10 and 13 of the Model
Commentaries to Article 7, paragraph (2) of the Model Treaty in
support of its contention that the separate-entity language of
Article VII, paragraph (2) requires that taxable profits be
attributed to a permanent establishment based on the
establishment's facts. These paragraphs provide in pertinent
part:
9(...continued)
(Model Treaty) provides in pertinent part:
Par. 1. The profits of an enterprise of a Contracting
State shall be taxable only in that State unless the
enterprise carries on business in the other Contracting
State through a permanent establishment situated
therein. If the enterprise carries on business as
aforesaid, the profits of the enterprise may be taxed
in the other State but only so much of them as is
attributable to that permanent establishment.
Par. 2. Subject to the provisions of paragraph 3,
where an enterprise of a Contracting State carries on
business in the other Contracting State through a
permanent establishment situated therein, there shall
in each Contracting State be attributed to that
permanent establishment the profits which it might be
expected to make if it were a distinct and separate
enterprise engaged in the same or similar activities
under the same or similar conditions * * *
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